Last week I had the pleasure of speaking at the newly renamed Investment Management Education Alliance (formerly the Mutual Fund Education Alliance) Distribution Summit. The hardest question I faced all day was one that I had to ask myself: How will I make it to New York during a weather apocalypse? But that was by no means the most interesting question I faced. Here are five thought-provoking questions that came up during our discussion of selling roles, compensation and the “future” of distribution:

  1. Why do we base more than 70% of incentive pay on gross sales? We kicked off the discussion by talking about how incentives typically evolve with the product life cycle, and how gross sales is great for high-growth products, but not so great otherwise. The age-old question of net sales came up, but we dismissed it as irrelevant in all but the most mature businesses. Most participants felt that gross sales shouldn’t be the only answer but then struggled to explain why the industry hasn’t changed: Fear of a first-mover disadvantage? Sales organizations too set in their ways? Product portfolios too diverse to manage via other metrics? There was no clear answer, but the feeling I got was that there was genuine interest in trying something different.

  2. Is “virtual” sales the wave of the future, or just some idea a consultant is pitching? At one point, we presented a somewhat extreme view of the future in which a virtual (remote, digital-enabled) salesperson is at the core of the distribution organization. The group was mixed on this idea. Nearly everyone was trying to make distribution more cost-efficient and data-driven, and this idea would certainly do that. But several individuals rightly pointed out that virtual sales only works if the advisor is willing to reciprocate, and at least a few thought that the biggest beneficiaries of this might be firms like mine, which would help design and optimize these roles—a fair concern. One interesting idea that came up: What if our national accounts relationships were used to shape the effectiveness of these roles?

  3. How can we align national accounts incentives with those of the field? Speaking of national accounts, it seems that everyone is looking to find ways to better connect national accounts to wholesalers in the field, and rightly so. My co-presenter, Jim Adams from MFS, gave a good example of how his firm has aligned metrics between the two groups. Having worked with some broker-dealers, I think those firms would be very receptive to asset management organizations whose sales teams aligned cohesively from the home office all the way down to the corner office. It’s common practice in other industries, and something that I think is worth improving on.

  4. Improving ETF data: Is it worth it? Many of the firms in the room were struggling to make sense of their ETF data, and to apply it to performance measurement, incentives, and insight development. We’ve done a lot of work with ETF data, and I can say with confidence that the data can be wrangled to the point of being very useful. But it really does take some wrangling, and a continuing and meaningful investment in data quality, governance and processing. The investment is a no-brainer for firms that have come to depend on ETFs, but for those who are just testing the ETF waters, a wait-and-see approach might be best.

  5. Is asset management following the pharmaceutical industry’s evolutionary path, and if so, is that a good thing? The most common request we got before the conference was for insight on how other industries, specifically pharmaceuticals, have addressed the challenges that asset managers are facing. During the event, I shared a perspective on the evolution of pharmaceuticals in the U.S., which I got from my colleague Pratap Khedkar, who leads our healthcare practice. The group in the room saw many similarities, from the industry structure all the way down to tactical challenges like customers (physicians, in this case) who are increasingly hard to reach through in-person sales outreach. The group was excited to hear how pharma companies have adapted, including shifting substantially toward digital and multichannel interactions, but there was also a fear of overwhelming customers with outreach, as has been the case in that industry. Our final take: While the pharma industry’s evolution is instructive, the asset management evolution isn’t written yet, so some of the pitfalls can still be avoided.

It was hard limiting this list to just five interesting questions, as a number of other thought-provoking ideas were discussed at the session. It was a great event overall, and I was glad I fought through the weather to get there.


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Topics: sales compensation, product launch, distribution, asset management, compensation, mutual funds, ETFs